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  • Writer's pictureJohn Ennis

Eye on AI - October 15th, 2021

Welcome to Aigora's "Eye on AI" series, where we round up exciting news at the intersection of consumer science and artificial intelligence!


This week, we’ll be addressing the coming gold rush in the smart assistants market, then discuss how companies can capitalize on it by staking out their own personalized corner of the sandbox.


How Smart Assistants Are About to Take Over Commerce

Smart assistants, or software used with smart devices that can perform tasks, services, or answer questions (think Alexa, Google Assistant, and Siri), are popping up everywhere. And we’re not just talking about speakers and smartphones. Headphones, wristbands, thermometers, exercise equipment, even everyday appliances are now coming equipped with smart assistants. According to the authors of the Forbes article “How companies can capitalize on the coming boom in ‘smart assistants”, this is no mere trend. It’s a gold rush.

“At work, A.I.-enabled voice assistants will transcribe notes and manage our calendars, and afterward, they’ll accompany us to the gym, where they’ll check our vitals and recommend workouts,” writes Forbes contributors Francois Candelon, Karen Lellouche Tordjman, and Ariane Lafolie. “Should our socks spring a hole, a quick word to our device will have a new pair on its way. These capabilities will create a marketplace whose size will be around $45 billion by 2027, upending commerce.”

It’s estimated that right now, 1 in 4 adults own a smart speaker. By 2024, 92.3 percent of smartphone users are expected to be using voice assistants. There’s no question that smart assistants have become fixtures in our daily routines, largely because of the simplicity of their use and time-saving capabilities. They can turn up and down the thermostat, check directions, purchase products with a few spoken words, turn on and off our cars, even cook meals or make our coffee. The applications are almost infinite.

And yet, as of right now, only the largest smart assistant providers control the platforms upon which these assistants live. Generally speaking, they have too many resources for challenger companies to compete with them on a larger scale, as their innovation has allowed them to pick and choose which third-party offerings their devices recommend—including their own—to unfairly reap the cross-selling and upselling benefits, which spells big trouble for other consumer-facing companies.

“Much the way that Apple’s app store reordered distribution, forcing brands to play by Apple’s rules, smart assistant platforms will do the same,” continue Candelon, Tordjman, and Lafolie. “Brands and retailers will have to fight harder to gain prominent placement, and they’ll have to pay a fee for every product they sell. Amazon, for example, pockets roughly one-third of the revenues from every third-party transaction on its website. The value shift will occur on a much larger scale in the smart-assistants marketplace.”

Still, there are opportunities for creative companies with an eye for an opportunity to enter the smart assistant market and carve out a niche for themselves.

Two Smart Assistant Challenges Smaller Companies Can Capitalize On

While it may be difficult to usurp the voice assistant platform creators, there are two major challenges in the way of smart assistants fully penetrating the market that may spell an opportunity for smaller companies looking to break in. The first of these is developing a fully human-level dialogue and context-based conversation within the AI itself. Companies that develop solutions to these issues, whether it be a technology that enables smart assistants to hear through a crowd or better speech recognition methods, may find their technology at the heart of the smart assistant market. This method of entry feels somewhat limited, with the Amazons, Googles, and Apples of the world likely to develop most of these solutions.

The second challenge, which I find more compelling, is delivering category-spanning personalized recommendations. You may be thinking, “Amazon already personalizes my recommendations, and so too does Netflix,” which is true. But recommending product A because you liked B, or one movie because it seems similar to the one you watched just last week, is about as complex as it gets at the moment. A more personalized approach –– a television assistant that recommends a free streaming service trial over purchasing, then suggests using the money saved to upgrade to that plan the user almost purchased last time, for instance, or a similarly specific niche where personalized recommendations might live (Peloton, Nest, smart thermometers, or FitBit are all great examples) gives smaller companies a way to enter the smart assistant arena with their own personalized platforms without having to directly challenge the major platform players.

“By laying down roots in highly personal spheres, the early movers can build intimacy and trust—critical to winning audiences for more ambitious offerings down the line,” add Candelon, Tordjman, and Lafolie. “Having mastered one domain, leaders can extend their reach into other universes—in the same way that Amazon is doing in core commercial categories today.”

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